LOGISTIEKE INFORMATIESYSTEMEN SAMENVATTING
CHAPTER 1 – BUSINESS FUNCTIONS AND BUSINESS PROCESSES
Enterprise Resource Planning (ERP) systems are core software programs used by companies to integrate and
coordinate information in every area of the business. A business process is a collection of activities that takes
one or more kinds of input and creates an output, such as a report, that is of value to the customer.
FUNCTIONAL AREAS AND BUSINESS PROCESSES
Each functional area of operation is composed of a variety of narrower business functions, which are activities
specific to that functional area of operation. Functional areas are interdependent, each requires data from the
others. An information system (IS) includes the people, procedures, software, and computers that store,
organize, analyse, and deliver information. Information systems that are designed so functional areas share data
are integrated information systems.
FUNCTIONAL AREAS AND BUSINESS PROCESSES OF A VERY SMALL BUSINESS
Marketing and Sales (M/S) functions include developing products, determining pricing, promoting products to
customers, and taking customers’ orders. Marketing and Sales also helps create a sales forecast to ensure the
successful operation of the business. Sales forecasts are estimates of future product demand, which is the
amount of a product customers will want to buy.
The functions within Supply Chain Management (SCM) include developing production plans, ordering raw
materials from suppliers, receiving the raw material into the facility, manufacturing products, maintaining
facilities, and shipping products to customers. It requires sales forecasts of M/S.
Accounting and Finance (A/F) performs financial accounting to provide summaries of operational data in
managerial reports, and it is also responsible for tasks such as controlling accounts, planning and budgeting,
and cash-flow management. It includes recording raw data. Raw data are simply numbers collected from sales,
manufacturing, and other operations – without any manipulation, calculation, or arrangement for presentation.
The functions of Human Resources (HR) are to recruit, train, evaluate, and compensate employees.
FUNCTIONAL AREA INFORMATION SYSTEMS
Inputs for Marketing and Sales could include customer data, order data, sales trend data, per-unit cost and
company travel expense policy. Outputs for Marketing and Sales could include sales strategies, product pricing
and employment needs.
If data are inaccurate or not current, manufacturing may run out of raw material or packaging; such a shortfall is
called a stockout. To avoid stockouts, management might choose to carry extra raw material and packaging,
known as safety stock, which can result in an overinvestment in inventory. The less accurate the forecast, the
more safety stock is required. Inputs for Supply Chain Management could include product sales data,
production plans, inventory levels, layoff and recall company policy. Outputs for Supply Chain Management
could include raw material orders, packaging orders, resource expenditure data, production and inventory
reports and hiring information.
Inputs for Accounting and Finance could include payments from customers, accounts receivable data, accounts
payable data, sales data, production and inventory data and payroll and expense data. Outputs for Accounting
and Finance could include payments to suppliers, financial reports and customer credit data.
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,Inputs for Human Resources could include personnel forecasts and skills data. Outputs for Human Resources
could include regulation compliance, employee training and certification, skills database and employee
evaluation and compensation.
CHAPTER 2 – THE DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SYSTEMS
THE EVOLUTION OF INFORMATION SYSTEMS
Information systems with departments that have their own stack, or silo, of information that is unconnected to
the next silo are called silos. Current ERP systems evolved as a result of three things:
I. The advancement of the hardware and software technology (computing power, memory, and
communications) needed to support the system.
II. The development of a vision of integrated information systems.
III. The reengineering of companies to shift from a functional focus to a business-process focus.
Eventually, the management of large companies decided they could no longer afford the type of inefficiencies
illustrated by the Mountaineering example – inefficiencies caused by the functional model of business
organization.
ERP SOFTWARE EMERGES: SAP AND R/3
SAP ERP software allows all business areas to access the same database, eliminating redundant data and
communication lags. An ERP system allows data to be entered once, and then used throughout the
organization. In information systems, errors most frequently occur where human beings interact with the
system. The basic functions of each of the SAP modules are:
The Sales and Distribution (SD) module records sales orders and scheduled deliveries. Information
about the customer is maintained and accessed from this module.
The Materials Management (MM) module manages the acquisition of raw materials from suppliers
(purchasing) and the subsequent handling of raw materials inventory, from storage to work-in-progress
goods to shipping of finished goods to the customer.
The Production Planning (PP) module maintains production information. Here production is planned
and scheduled, and actual production activities are recorded.
The Quality Management (QM) module plans and records quality control activities, such as product
inspections.
The Plant Maintenance (PM) module manages maintenance resources and planning for preventive
maintenance of plant machinery in order to minimize equipment breakdowns.
The Asset Management (AM) module helps the company manage fixed-asset purchases (plant and
machinery) and related depreciation.
The Human Resources (HR) module facilitates employee recruiting, hiring, and training. This module
also includes payroll and benefits.
The Project System (PS) module facilitates the planning for and control over new research and
development (R&D), construction, and marketing projects. This module allows for costs to be collected
against a project, and it is frequently used to manage the implementation of the SAP ERP system.
Two financial modules encompass the above mentioned modules:
The Financial Accounting (FI) module records transactions in the general ledger accounts. This module
generates financial statements for external reporting purposes.
The Controlling (CO) module serves internal management purposes, assigning manufacturing costs to
products and to cost centres so the profitability of the company’s activities can be analysed. The CO
module supports managerial decision making.
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, The Workflow (WF) module is not a module that automates a specific business function. Rather, it is a set of
tools that can be used to automate any of the activities in SAP ERP. It can perform task-flow analysis and prompt
employees if they need to take action. The Workflow module works well for business processes that are not
daily activities but that occur frequently enough to be worth the effort to implement the workflow module.
Generally, a company’s level of data integration is highest when the company uses one vendor to supply all its
ERP modules. Frequently, companies integrate different systems using batch data transfer processes that are
performed periodically. In those cases, however, the company no longer has accurate data available in real time
across the enterprise. After a company chooses its major modules, it must make an incredible number of
decisions on how to configure the system.
SAP ERP was the first software to deliver real-time ERP integration. It is suitable for large companies, has high
cost, it automates data updates and best practices are applicable. A best practice is the best, most efficient way
of handling a certain business process. If a company’s business practices do not follow one of the best practices
incorporated in the SAP ERP design, then the business must redesign its practices so it can use the software.
ERP FOR MIDSIZED AND SMALLER COMPANIES
SAP Business All-in-One is a single package containing specific preconfigured bundles of SAP ERP tailored for
particular industries and can be installed more quickly.
BusinessByDesign is an ERP product hosted by SAP and accessed through a Web browser. It is an example of the
SaaS approach that eliminates the need for a company to buy and maintain the software and hardware to run
an ERP application. SaaS does not eliminate the need to configure the software to manage a company’s
processes or the need to train users of the system, but it does reduce the need for IT support staff to operate
the ERP system.
In response to difficulties of implementing the SAP R/3 system, SAP developed the Accelerated SAP (ASAP)
implementation methodology, a framework for implementing systems, to ease the implementation process.
CHOOSING CONSULTANTS AND VENDORS
Before choosing a software vendor, most companies study their needs and then hire an external team of
software consultants to help choose the right software vendor(s) and the best approach to implementing ERP.
THE SIGNIFICANCE AND BENEFITS OF ERP SOFTWARE AND SYSTEMS
ERP systems offer the following benefits:
ERP allows easier global integration.
ERP integrates people and data while eliminating the need to update and repair many separate
computer systems.
ERP allows management to actually manage operations, not just monitor them. The ERP system
already has all the data, allowing the manager to focus on improving processes. This focus enhances
management of the company as a whole, and makes the organization more adaptable when change is
required.
QUESTIONS ABOUT ERP
The total cost of an ERP system implementation includes several factors:
The scale of the ERP software, which corresponds to the size of the company it serves.
The need for new hardware capable of running complex ERP software.
Consultants’ and analysts’ fees.
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